The world’s largest steel producer is struggling with weak prices. Source: AP
LUXEMBOURG. The prognosis of the business development of Arcelor-Mittal is not good. CEO Lakshmi Mittal bent low over the documents on the conference table before him, while his son Aditya Mittal, the forecast for the current quarter presented. While the world leader expects profitability, but the unexpected will turn out badly.
Or so it will see the investors to part with their titles and the stock yesterday over five percent in the meantime sent into the red. Earnings before interest, taxes, depreciation and amortization (EBITDA) would lie in the first quarter at 1.8 until 2.2 billion U.S. dollars, said Chief Financial Officer Aditya Mittal yesterday, when presenting the annual accounts 2009th Analysts expected an average of 2.6 billion U.S. dollars. After Arcelor-Mittal in the fourth quarter was slightly below expectations, is now the outlook for the first quarter of disappointing, says Unicredit analyst Christian Obst
The reason for the slow business development in the opinion Aditya Mittal, the weak steel prices. They were killed in the final quarter of 2009, although the customers had ordered more. The effect gets Arcelor-Mittal is only now feel, because the material is delivered in the current reporting period. For some product information to the Metal Bulletin calculated a discount of 15 percent.
CEO Lakshmi Mittal dismissed fears that the company had its production ramped too quickly – provided the extra capacity was backed up with orders.
The market leader had withdrawn with the slump in steel demand in the final quarter of 2008 alone, ten o’clock blast furnaces in Europe, thanks to a reduced supply to dampen pressures on prices. There are now again more than 20 of the 25 plants in operation. Capacity utilization is expected to increase in the current year quarter by five percentage points to 75 percent. Lakshmi Mittal admitted that would suffer, despite the higher demand, the operating margin due to price decreases.
During the year, should this be better, because the steel prices will continue to recover. Executive Michel Wurth noted that Arcelor Mittal had recently increases of eight percent can enforce. In the coming months the company will continue to rotate at the price spiral.
This is also necessary because the mine operators in turn to a strong price premium on iron ore contracts, pushing some analysts think a rise of 40 percent for conceivable. Lakshmi Mittal ruled out any increase in the magnitude is not, but pointed out that the talks would be held with the commodity groups of the Stahlkochern from China and Japan. In general, the steel industry of a country negotiating a pilot contract, which will be borne by the producers in other countries.
Should the commodity groups enforce their prize asset, which is Erzpreise climb to a new record high, with corresponding effects on the European and North American industry.
Especially for the German steel maker, it might be hard, because even their customers are struggling with the consequences of the crisis. The sales figures are still bad, according to the industry association VDMA, the German machinery sales in 2010 to run as slow as last year. Automobile industry and construction is hardly better.
The mining companies see, despite the slowdown in industrial countries scope for a price, because their main customers are sitting in China and other emerging countries. Therefore, Arcelor-Mittal sets here the focus of its investments. How to create new steel mills in India and developed natural resources in Africa. Acquisitions in Europe or the U.S. had no plans, however, said Lakshmi Mittal.
Driven by demand from emerging countries in the Indian-born entrepreneur expects 2010 for the industry with a growth rate of world production by ten percent. So that in 2007, achieved record high of 1.35 billion tonnes would be recovered. The cabins of Europe and North America would produce, regardless of an increase of 15 percent to 23 percent less steel than in previous bests, said supply er.e numbers.